How Blockchain can help the environment
Conservation of the environment, green practices, environmental friendliness and sustainable practices make big news headlines these days. Concerns about how human activities affect the environment, either directly or indirectly, have led to conferences between world leaders and global bodies, and announcements of a global energy crisis.
Some of the biggest environmental problems we face today are directly linked to energy production and consumption. According to the United Nations Environment Program (UNEP), the energy sector accounts for about two-thirds of global greenhouse gas emissions related to human activity. Energy used for heating, electricity, transport and industry involves burning fossil fuels. When fossil fuel is burned, it releases large amounts of carbon dioxide (CO2), which is a greenhouse gas. The Intergovernmental Panel on Climate Change (IPCC) warns that fossil fuel emissions must be halved within the year if global warming is to be limited. The IPCC aims to halve global emissions by 2030.
Cryptocurrencies have had their share of backlash related to greenhouse emissions due to the amount of energy required to my some cryptocurrencies. Previous cryptocurrencies, such as Bitcoin, use a Proof-of-Work (PoW) consensus mechanism that requires large amounts of energy – greater than the total energy consumption of some countries. Data from Digiconomist shows that the annual electricity consumption of Bitcoin is 132.82 terawatt-hours (TWh) which is comparable to the electricity consumption of Argentina; Bitcoin leaves an annual carbon footprint of 74.08 tonnes of carbon dioxide (MTCO2). Data from the Cambridge Bitcoin Energy Consumption Index (CBECI) estimates today’s Bitcoin annual electricity consumption to be between 97 TWh and 149 Twh.
The energy concerns of mining PoW cryptocurrencies have led to the invention of more energy efficient consensus algorithms. Some existing PoW blockchains are moving to Proof-of-Stake (PoS) systems – Ethereum recently migrated from PoW to PoS. Newer Layer-1 blockchain projects are now adding words like green, environmentally friendly and sustainable in their whitepaper when describing their consensus mechanism and cryptocurrency. The longing for green cryptocurrencies and improvements to the current environmentally destructive methods of cryptocurrency mining is evident. In April 2021, the Crypto Climate Accord (CCA) was formed. CCA is an open source environmental initiative that aims to make cryptocurrencies green. The formation of the CCA was inspired by the Paris Climate Accord. CCA comprises more than 250 companies and individuals spanning the crypto and financial sectors, technology, NGOs and the energy and climate sectors.
The pursuit of sustainable cryptocurrency mining has gained attention and several green initiatives have started. One such initiative is the use of waste energy to mine cryptocurrencies. Existing and new mining companies have been researching ways to obtain different types of waste energy that will not increase their carbon footprint when used in mining operations.
Blockchain mining companies looking to use zero-carbon electricity to mine cryptocurrencies have begun exploring ways that “stranded” methane (CH4) can generate zero-carbon electricity. Methane, one of the greenhouse gases, is emitted during the production and transport of coal, natural gas and oil. Methane accounts for around 20% of global emissions. A company called EZ Blockchain is partnering with oil and gas producers to use their wasted energy, including methane, by mining cryptocurrency with such energy. By converting waste gas that is burned into the air into electricity to mine crypto, the emission of methane is reduced, thereby reducing the carbon footprint of the environment while mining cryptocurrencies – an absolute win-win.
Autonomous, a crypto mining company focused on clean energy, uses only wind and solar energy to mine cryptocurrency. Stronghold Digital Mining, a company based in Pennsylvania, converts coal waste from abandoned mines into power to make crypto mining more environmentally friendly. The company clears decades-old coal waste and uses it to power Bitcoin mining. Some of the coal waste is located near homes and can leak into waterways, thus disrupting the livelihood of residents. By removing this coal waste for Bitcoin mining, the environment is cleaned up. Although this waste-to-energy generation process releases some greenhouse gases, Stronghold Digital claims it uses a carbon capture technology to reduce CO2 emissions. The company claims it removes up to 95% of the gases emitted.
Incentive schemes are often set up to encourage behavioral change. A good example is the recycling incentive scheme that has been introduced in various parts of the world to encourage households and waste producers to reuse and recycle plastics and their derivatives. In a survey, conducted by ResearchGate in Finland, on the role of financial incentives to promote recycling, 62.6% of respondents agree that financial incentives are necessary in cases of behavioral change.
Blockchain has proven to be one of the best technologies to use for implementing incentive schemes. With blockchain technology, incentives can be tokenized; in this way, incentive rewards can be paid out immediately and automatically. Blockchain technology’s immutability also eliminates room for manipulation, and incentives are truly earned. A number of Web3 lifestyle applications have emerged; Leveraging tokenized incentives, these apps reward users who meet a certain lifestyle goal with cryptocurrency tokens, which are mostly instantly tradable and convertible to fiat. Move-to-earn and learn-to-earn are some of the incentive-driven concepts that have been implemented using blockchain technology. STEPN, a move-to-earn NFT app, pays its users in its native cryptocurrency GST when they meet exercise and training goals set within the app.
Drivn, a sustainable behavior change ecosystem, rewards its users for engaging in low carbon footprint travel behaviors. Drivn aims to make the environment cleaner by giving symbolic rewards to users who use greener means of transport. With this incentive system, users will be encouraged to cycle more, drive electric cars and choose travel options with a low carbon footprint.
Based on the success rate of other incentive-driven apps and concepts powered by blockchain technology, the encouragement of green practices could also be boosted by leveraging blockchain technology’s tokenized incentives.
